Silicon Valley is the nation's top dog for innovation: study

SAN JOSE -- Silicon Valley remains the nation's innovation leader, as measured by the region's patent output -- and it is stretching its lead over its closest rivals, a report released Friday shows.

Measured by patents per 1,000 employees, the Silicon Valley -- defined as Santa Clara County for the purposes of the study -- is No. 1 in a survey of 358 metropolitan areas, a report released by the Brookings Institution shows.

What's more, Silicon Valley has been on top every year starting in 1988, Brookings reported in its survey, the first of its kind to measure patent output in U.S. metro centers.

"(Silicon Valley) has staying power for innovation," said Jonathan Rothwell, an associate fellow with Brookings, a Washington, D.C.-based research institute. "It is an extraordinary story of a metro region that has been strong for quite a while."

During 2012, Silicon Valley produced 12.57 patents per 1,000 employees.¿

Not only was Silicon Valley the only region in the country with a double-digit amount for patents, it had more than twice the ratio of the No. 2 metro center in the country, the Corvallis, Ore. area, which had 5.27 patents per 1,000 employees in 2012.

Silicon Valley is far from alone in the Bay Area when it comes to innovation.

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"The Bay Area is extremely strong in every measure of innovation and in many industries," Rothwell said. "It is creating many patents, quality patents in numerous industries."

Computer and electronics manufacturing, data processing, Web hosting, software, telecommunications and other industries are among the top sectors for patent creation and innovation, Brookings determined.

"Research and development is the magic stuff that creates productivity and economic growth," said Scott Anderson, chief economist with San Francisco-based Bank of the West.

Santa Cruz County was ranked No. 5 in the nation in 2012, with 4.24 patents per 1,000 employees. The San Francisco-East Bay region was ranked No. 6 with 3.96 patents per 1,000 employees.

"An economy that is more innovative is likely to be generating lots of employment in higher income, value-added, higher-quality sectors of the economy," said Jon Haveman, chief economist with the Bay Area Council's Economic Institute.

The companies with the most patents during 2011 in the South Bay were Cupertino-based Apple (AAPL), San Jose-based Cisco Systems (CSCO), New York state-based IBM, Palo Alto-based Hewlett-Packard (HPQ) and Santa Clara-based Applied Materials.

The companies in the San Francisco and East Bay region that produced the most patents were Apple, Cisco, Redwood City-based Oracle (ORCL) Systems, Applied Materials and Sunnyvale-based Yahoo (YHOO).

Other notable organizations in the top 20 in the Bay Area included San Ramon-based Chevron, UC Berkeley and Stanford University, Brookings reported.

"The big challenges for these regions will be to remain competitive," Rothwell said.

Housing prices and a cost of living that squeezes pocketbooks are among the region's obstacles.

"It will become more difficult for companies to be able to afford to operate in the Bay Area, and it may be especially difficult for startups that cannot afford costly office space," Rothwell said.

Contact George Avalos at 408-373-3556 or 925-977-8477. Follow him at twitter.com/george_avalos.